Four Different Types Of Secured Loan Options, Interests, Benefits – Four types of secured loans will meet the sudden need of cash, know its benefits
Generally, people prefer secured loans as compared to non-secured loan options. Secured loans have low credit risk.
New Delhi. There can be a sudden need for cash at any time in life. In such a situation, people fulfill their demand by taking a secured loan. There are many options for a secured loan. Secured loans have less credit risk as the lender always has the option of taking a mortgage.
Generally, people prefer secured loans as compared to non-secured loan options. Here we will list down some secured loan options. Let us try to understand their characteristics and requirements.
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loan against property
Loan Against Property (LAP) is available against mortgage of any residential, industrial or commercial property. If you are looking for a long term loan, then using LAP can be a good option for you. LAP has a repayment tenure of up to 15 years, with some lenders offering longer tenures of up to 20 years. The loan amount can range between 50 to 70 percent of the current property value.
LAP is a perfect option for loan buyers who are looking for a larger amount for a longer tenure. However, this is not true for those who want instant money. Because it may take up to 2-3 weeks for the LAP to pass.
Loan Against Security
In case of cash crunch, you can avail a loan by pledging your market investments like bonds, shares, ETFs, mutual funds, NSCs, life insurance policies, KVPs etc. The advantage of using this option of secured loan is that during the time when your investments are relevant, you will continue to get interest, dividend, bonus and other benefits. The loan amount sanctioned depends on the valuation of your investment instruments and is subject to the loan to value ratio as decided by RBI.
Top up loan can only be taken by a person who already has a home loan. He has a good repayment track. One of the main factors that play a key role in deciding the loan amount is the LTV (loan to value) ratio in this case. The total home loan amount outstanding after the top loan should be within the LTV ratio of the loan. Also, the top-up loan repayment tenure cannot exceed the remaining tenure of the home loan. Generally, the approval of a top-up loan may take up to 1 to 2 weeks.
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Gold loan is another option of secured loan to meet sudden cash requirement. Loan application can be approved within few hours of filing. The repayment tenure of gold loan is up to 3 years but some lenders also offer longer tenures of 4 to 5 years. The loan amount sanctioned is usually up to 75 per cent of the value of the gold. It should be of minimum 18 carat purity. Gold loan is a flexible repayment option.
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